Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Trucks dealer sues Volvo for improper termination, (Jul 2, 2015)

By Greg Hammond, J.D.

A Volvo heavy-duty trucks dealer is seeking injunctive relief against the termination of its dealer agreement with Volvo. The dealer filed suit yesterday, claiming Volvo engaged in a pattern of arbitrary and capricious conduct intended to culminate in the wrongful termination of the dealer’s franchise (VIP Truck Center, LLC v. Volvo Trucks North America, July 1, 2015).

VIP Truck Center, LLC entered into a Sales and Service Agreement with Volvo in September 2010, which is due to expire on August 30, 2015. Throughout the term of the agreement, VIP alleges that Volvo failed to make a sufficient quantity of new Volvo trucks available to VIP that are amenable to Michigan roads and climate in order to enable VIP to meet its market share objectives. Specifically, VIP alleges that Volvo has initiated and continued to follow a pattern of conduct intended to terminate VIP’s franchise based on alleged deficient sales performance or not achieving annual “Business Plan” results.

The pattern of wrongful conduct purportedly includes: (1) establishing an arbitrary, capricious and inequitable market penetration objective that cannot be reasonably achieved in VIP’s market; (2) refusing to adjust VIP’s market penetration requirement to a reasonable and achievable level; (3) continuing to measure VIP’s performance against the arbitrary penetration level it has set and by intentionally ignoring VIP’s volume sales as compared to other dealers in similar markets; (4) failing to provide VIP with a sufficient quantity of saleable new trucks to achieve arbitrary or realistic sales objectives; (5) failing to act in good faith, in violation of the Michigan Motor Vehicle Dealer Franchise Act (MVDFA), by holding VIP to a different sales and market penetration than other dealers; and (6) failing to establish “good cause” for termination in violation of MVDFA.

VIP filed a five-count complaint, alleging: (1) wrongful termination; (2) violation of the MVDFA; (3) violation of the Automobile Dealers Day in Court Act, 15 USC § 1221; (4) breach of contract; and (5) tortious interference with present and future business. The dealer seeks permanent injunctive relief against the termination of the dealer agreement with Volvo and enjoining Volvo from denying renewal of VIP’s dealer agreement in September of 2015; damages incurred as a result of Volvo’s violations of statute and failure to provide VIP with a reasonable number of appropriate vehicles for resale; costs of suit, including attorney fees; punitive damages; and an order declaring that Volvo has failed to establish good cause for terminating VIP’s dealer agreement.

The case number is 2:15-cv-12381-MFL-MJH.

Attorneys: Michael J. O’Shaughnessy (Colombo & Colombo, P.C.) for VIP Truck Center, LLC.

Companies: VIP Truck Center, LLC; Volvo Trucks North America

News: FranchisingDistribution